Split-Year Taxation Between Germany and Italy
An individual moved from Germany to Italy in July. Before the move, they worked and paid taxes in Germany. After relocating, they started working remotely for an Italian company. They assume that the tax year can be split, with each country taxing only the period of residence within its borders.
Input Data
- Individual movement: From Germany to Italy
- Employment status: Remote work for an Italian company
- Assumption: Tax year can be split between Germany and Italy
Jurisdiction Conflict
Country of registration — Germany considers tax residency based on spending more than 183 days or maintaining a permanent home in the country.
Country of effective activity — Italy may assert tax residency if the individual spends more than 183 days there and works for an Italian company.
Conflict — The conflict arises from the individual's assumption of a split-year treatment, which requires clear documentation of residency change and presence dates, potentially leading to double taxation if not correctly applied.
AI Analysis
Scenario A — German Tax Authority Interpretation
- Germany may assert full-year tax residency if 183-day presence is not well-documented.
- This could result in double taxation without proper treaty application.
- Risk: High risk of full-year taxation by Germany.
Scenario B — Italian Tax Authority Interpretation
- Italy may also assert tax residency based on physical presence and employment.
- Failure to apply the tax treaty could lead to dual taxation.
- Risk: Medium risk of dual taxation without treaty relief.
Scenario C — Split-Year Treatment
- Split-year treatment requires clear documentation of residency change.
- If not properly documented, both countries may claim full-year residency.
- Risk: High risk of incorrect tax period division.
Key risk indicators
- Lack of clear documentation of residency change
- Unclear dates of physical presence in each country
Output of Richys AI Analysis
- AI assesses exposure based on presence and employment factors.
- AI matches facts to residency and tax treaty criteria.
- AI highlights need for expert escalation to resolve dual residency issues.
Expert Boundary
Involvement of a verified EU expert is required for:
- country-specific interpretation of the center of vital interests
- application of the Germany–Italy tax treaty to concrete facts
- selection of a defensible filing position
- preparation for potential tax authority inquiries
Case Conclusion
Tax authorities observe residency based on physical presence and employment. False assumption of split-year treatment without documentation is exposed. Mismatch identified between legal residence and factual presence. Risk becomes material if documentation is insufficient and treaty provisions are not applied.
Start case analysisThis case is for illustration purposes only. Real outcomes depend on residence, income structure, documents and timing. For your specific situation, use structured case analysis with AI and verified EU experts.
Mathieu Fiscalis
AI assistant – Taxes & Cross-Border Tax